Cable Technology Feature Article

Dish Network Sues ESPN for Offering Better Deals to Rivals

Dish Network is suing ESPN (News - Alert) for $152 million after the cable sports channel allegedly breached its contract with the satellite TV carrier by offering better deals to rival cable and satellite operators.

The lawsuit, originally filed in 2009, went before a jury on Monday and focuses on the terms that ESPN, which is owned by The Walt Disney (News - Alert) Co., signed with Dish Network.

Dish Network accuses ESPN of breaching a part of its contract signed in 2005 that requires ESPN to offer its programming, including ESPN Classic and the Spanish-language ESPN Deportes, at the same rate it offers competing cable and satellite operators.

ESPN charged an average of $5.12 per month per subscriber, making it one of the most expensive cable channels for operators, according to research firm SNL Kagan.

According to Barry Ostrager, a lawyer for Simpson Thacher & Bartlett representing Dish, ESPN made a “calculated decision” in offering lower rates and allowing competitors to reduce distributions of the less popular ESPN channels.

ESPN gave a lower rate for ESPN Deportes to Time Warner Cable in 2007 and Verizon (News - Alert) Communications a year later. In 2006, ESPN also allowed Comcast to reduce the number of households that could get ESPN classic, which is devoted to reruns of sporting events.

Dish contends that the lower rates cost the operator $18.9 million in damages and the reduced distribution cost it $78.9 million. Dish is seeking an additional $52 million in damages.

Diane Sullivan, a lawyer for Weil, Gotshal & Manges, countered saying that Dish’s motives for the lawsuit have more to do with Dish’s finances than its desire for fairness.

“The evidence is going to show Dish doesn't want a fair deal, it wants a better deal than all the other distributors,” Sullivan said.

This is not the first time Dish and Disney have gone to court. In 2008, Dish sued Disney for not offering what Dish believed to be an adequate number of high-definition channels. The court ruled in favor of Disney in 2011, allowing it to keep $52 million in fees.

The outcome of this court case could mean that Dish subscribers may have to go without the sports channel.

As clashes between operators and channel providers become more frequent, more viewers are “cord cutting,” ditching cable and satellite providers to watch online video exclusively.